South Africa's rand steadies but stocks' losing streak runs to four days

JOHANNESBURG, April 21 (Reuters) - South Africa's rand steadied against the dollar on Friday as developed market currencies came back in favour, ending a recent rally that has lifted the unit to 3-week high.

Stocks fell for a fourth straight session to a three-week low, as Pioneer Food Group weighed and investors stayed away from risky assets.

At 1530 GMT the rand was trading 13.1500 per dollar, unchanged from its overnight in New York.

The currency hit a 3-week high of 13.1175 to the dollar on Thursday as yield-hungry investors ignored the political fallout and two credit downgrades to "junk" that followed President Jacob Zuma's sudden firing of his finance minister in late March.

The rand faced selling pressure as the dollar was back in favour on the back of subdued risk appetite with investors cautious ahead of French elections this weekend and possible announcements about tax cuts in the United States.

"The thing we need to watch for over the weekend and on Monday is the euro in terms of the French election and its results. We might see some volatility," Treasury One currency dealer Andre Botha said.

On the bourse, the benchmark Top-40 index closed 0.51 percent down at 45,500 points, while the broader All-share index lost 0.58 percent to 52,194 points, a level it hit on March 31 when Zuma removed then finance minister Pravin Gordhan in a controversial cabinet reshuffle.

"There are concerns about what's happening on the political side of things. You're going to have a situation where certain funds' mandate, particularly offshore investors, are not allowed to hold junk assets so they have to realign their portfolios accordingly," said Independent Securities trader Ryan Woods.

Investors sold off Pioneer Food Group shares after the seller of Ceres juice and Sasko bread said a large potential deal it was exploring had fallen apart because of ratings downgrades of the country's sovereign debt.

Shares in Pioneer fell more than 7 percent after the announcement, booking its biggest daily loss since the cabinet reshuffle, and closed 4.38 percent down at 169 rand.

"Part of the pricing had been put in place already, the market had pre-empted that some sort of deal was going to take place and now they're adjusting their positions because that is now off the table," said Woods.

In fixed income, the yield for the benchmark government bond due in 2026 dipped 2.5 basis points to 8.645 percent. (Additional reporting by Olwethu Bosso; Editing by Jeremy Gaunt)